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Private businesses in Kuwait hit hard due to coronavirus crisis

14 July 2020

Private businesses in Kuwait have been hit hard due to sharp decline in the number of customers, with nearly 80 percent of the companies unable to cover expenses, the financial and economic committee said in its report to the National Assembly.

The committee submitted the report to justify a draft law which may allow private businesses to slash salaries of their staff or cut jobs during the coronavirus crisis.

The report said that the number of customers dipped by 75 percent in May, hitting the revenues badly, with about 80 percent of companies being unable to cover the expenses for six months.

Kuwait businesses

The committee said 26 percent of companies are almost on the verge of collapse as their revenues dipped by 80 percent on average.

It also said that due to the delay in issuing necessary legislation, 21 percent of the companies violated laws and compelled their employees to take unpaid leaves, while 15 percent laid off their employees.

The draft law was under discussion for months in the Assembly, and allows companies to reduce the salary of their staff by 50 percent, provided, the new salary does not fall under the minimum wage. The reduction should be done only after mutual agreement and the working hours should be reconsidered.

The law also permits companies to ask their staff to go on special leave with 30 percent pay or minimum wage whichever is higher. This is applicable during the lockdown months or during restrictions imposed by the government.

The draft law, however, emphasizes that at the end of service, indemnity should be calculated on the basis of original pay.

The bill, however, obliges the government to pay the amounts deducted to Kuwaitis employed in the private sector, and in some cases the security agency will pay unemployment benefits to affected Kuwaitis for six months.

Robin Vinod

Writer/blogger who writes on topics such as travel, real estate, employment and everyday life on GCC countries.

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